Among employees in Germany, job satisfaction has been falling since the mid-1980s – an alarming finding. At the Max Planck Institute of Economics in Jena, researchers working with Martin Binder are studying the role that different forms of employment and states of health can play – and the circumstances under which this could be politically relevant.

Trust is a key component of our economy. Cars would remain unsold at the dealer’s yard. The recruitment of suitable job candidates would be much more difficult. Economists argue that contracts, enforceable by law, ought to be concluded. Yet it is acknowledged that not all details of a relationship can be put into a contract. In this domain of incomplete contracts trust and trustworthiness are required. In a series of studies experimental economists at the Max Planck Institute of Economics investigated when and why we trust, and when we return trust.

Decades of research in the social sciences have demonstrated that an individual’s economic success is to a substantial part determined by his or her parents’ success. This phenomenon is only partially explained by direct transfer mechanisms (i.e. by donations or inheritance). One mechanism by which such intergenerational inertia in economic outcomes is likely to emerge is the similarity in preference sets between parents and their children. Researchers at the Max Planck Institute of Economics report on the observable cross-generational similarity in activity preferences.

How can clients increase the quality of the financial advice they ask for? When and why are employees with temporary employment paid less than employees with permanent employment? Scientists at the Max Planck Institute of Economics report on two experiments with possible applications for the financial and labor markets.

Inspired by research in biology and psychology, the central economic concept of “utility” has received a hedonistic interpretation with the advent of happiness research. An individual’s happiness (subjective well-being) is influenced by a complex web of determinants such as income, (un)employment, health and social factors. But in turn, happiness also influences all these factors, with happier individuals more successful in all domains.

Over the last two decades lab experiments became an established method in economics. Only recently field experiments gained some prominence. Both have their respective pros and cons, and we point out that their use should be regarded as complementary. Finally, the potential scope of field experiments is illustrated in showing three recent studies in the context of payment mechanisms and charity.

The Max Planck Institute of Economics was realigned in 2014. Its new name is Max Planck Institute for the Science of Human History. During the two decades of its existence the MPI of Economics had four departments: Institutional Economics and Economic Policy;Evolutionary Economics; Entrepreneurship, Growth and Public Policy and Strategic Interaction.

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